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Ackermann defends banking bonuses to retain talent

Deutsche Bank chief executive Josef Ackermann on Wednesday defended bonuses as a requisite reward for talent and a lesser factor in the global economic crisis than has been made out by politicians.

Other criteria such as risk management, stress tests and liquidity management are “substantially more important" than bonuses, Ackermann emphasised, saying there was no evident connection or pattern “between a good or bad bank based on their business model or the size of bonuses they awarded".

Ackermann stressed banks were under pressure to award competitive packages, saying “the war for talent is in full swing".

Addressing a Frankfurt banking conference, Ackermann urged his peers to accept the need for tougher capital norms, saying the lack of capital in the industry “has to be corrected”. However, any exhaustive proposals in this regard should factor in the “consequences for credit availability and the price of credit”, he cautioned.

Speaking at the same venue, HSBC chairman Stephen Green backed claims that much of what investment banks do is "socially useless", and urged an industry-wise cultural overhaul. This should include an end to "excessive" bonuses, to ensure markets are more socially responsible and less driven by short-term profits, he said.